Debt Counseling Information

When you get yourself into a large amount of debt, you may be looking for any alternative that you can find besides filing for bankruptcy. One option that many choose is debt counseling. Debt counseling is a program in which a trained counselor helps you evaluate your options and possibly set up a debt management plan.

Evaluate Situation

When you set up an appointment with a legitimate debt counseling service, one of the first things that you will do is evaluate your current situation. Your debt counselor will sit down with you and look at your financial circumstances. You will provide information about your debts as well as how much money you bring in. The debt counselor will look at your options and then try to help you come up with the best solution.

Debt Management Plan

One of the most common aspects of debt counseling services is the debt management plan. Most of these companies offer a debt management plan as an alternative to bankruptcy. With this kind of plan, the counselor talks to your creditors and negotiates lower interest rates on your behalf if possible. You then agree to send money to your debt counselor every month and the counseling agency sends it to your creditors. In this way, you can usually pay off your debt in around five years.

Fees

Even though using a debt management plan can help you save money on interest and eliminate your debt, it is not free. These services often charge a monthly fee for processing your payments through the debt management plan. While this fee may not seem like much, it can add up over the course of five years. You could instead negotiate the terms of the plan directly with your creditors and avoid paying the debt counseling service.

Scams

Unfortunately, this industry is filled with scam companies posing as legitimate help. These companies advertise that they can help you eliminate your debt quickly and easily. Then they charge you a large upfront fee and never provide the services that they promised. Before you choose a debt counselor to work with, it is important that you do a thorough amount of research about the company first. Make sure that you are dealing with a legitimate company instead of a scam.